The players competing in Brazil’s US$400mn mobile auction

The auction of the remaining 700 MHz bands by Anatel, scheduled for April 30, has entered the decisive phase with eight qualified companies submitting bids: Claro, TIM, Vivo, Brisanet, Unifique, MHNet, IEZ! Telecom and the Amazônia 5G Consortium.

The auction concerns the sub-bands from 708 MHz to 718 MHz and from 763 MHz to 773 MHz, with expectations of around 2 billion reais in investments, and is aimed at enabling regional operators (such as Brisanet and Unifique) to access frequencies to expand coverage, complementing the 3.5 GHz band.

The dispute is strategic because 700 MHz is a “low” band, more efficient for wide coverage and signal penetration, which makes it especially valuable for expanding 4G and 5G in rural areas, small localities, and highways.

According to the guidelines of the Ministry of Communications, the model is non-revenue-generating: instead of maximizing cash for the government, the design prioritizes coverage obligations.

The official goal is to bring service to around 800 thousand people in underserved locations and to cover long stretches of unserved federal highways.

The auction’s design also helps explain why it became the target of legal actions.

In the first round, there is priority for regional operators that already hold certain 3.5 GHz authorizations originating from the 2021 auction.

The groups with this preference are Brisanet, Unifique, Amazônia 5G and iez! telecom, distributed by regional areas.

If there are blocks left over, they can be sliced into smaller lots of 5+5 MHz in a second round restricted to small-scale providers. Only in a third round do the major telecoms enter without this initial restriction.

That is where the main legal controversy arises.

Legal disputes

A Acel, an association that brings together mobile operators, is challenging in court whether Unifique and the Amazônia 5G consortium can inherit priority from the first round based on frequencies previously linked to Ligga/Sercomtel.

The argument is that the transfer of this spectrum should not produce this competitive effect before the full fulfillment of the obligations assumed in the 2021 auction. The Federal Court requested a statement from Anatel, but has maintained, at least for now, the schedule of the tender.

There is a second legal front, brought by TelComp.

In this case, the objection is not limited to the situation of Unifique and Amazônia 5G: the entity argues that the very priority given to regional operators in the initial round violates free competition, equality, legality, and the pursuit of the most advantageous proposal for the administration.

In other words, the argument is that the notice would have created an artificial barrier that reduces competition right at the beginning of the bidding for a scarce and valuable asset.

On the side of the regional offices, the defense has been built around legal certainty and regulatory consistency.

Even before the submission of the proposals, Unifique, Ligga, Iez! and Brisanet had already asked Anatel for an exceptional extension of the deadline for secondary use of 700 MHz, claiming that the delay of the auction and the uncertainty about the final coverage obligations made decision-making and investments difficult.

This point is relevant because it reinforces the narrative that these operators structured their expansion plans based on a regulatory framework that granted them priority.

The Ministry of Communications, when publishing the guidelines, made it clear that it wanted to prioritize regional operators, impose roaming for visiting users, and bring coverage to locations and highways that are not commercially attractive to the major telecom companies.

The backdrop is also weighed down by the succession of regulatory events that preceded the tender notice.

The TCU approved the continuation of the process in February, and Anatel published the notice on February 13, with subsequent updates and clarifications in the bidding process.

From a formal standpoint, the auction moved forward with significant institutional backing; even so, this backing did not shield the structuring from last-minute legal challenges.

(The original version of this content was written in Portuguese)